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John Alan Cohan, Contributing Columnist

Opinion
Mar 6, 2015
Data needs to start somewhere. In the cattle business, it starts with the calving book. The calendar probably will have some notes on it for those once-yearly events. For instance, bull turnout, weaning, cattle sales, branding and calf workings are all examples of annual events.
Opinion
Mar 6, 2015
Data needs to start somewhere. In the cattle business, it starts with the calving book. The calendar probably will have some notes on it for those once-yearly events. For instance, bull turnout, weaning, cattle sales, branding and calf workings are all examples of annual events.
Opinion
Nov 21, 2014
Top aides to the president have made the IRS hostile turf to honest taxpayers. The IRS has targeted individuals and organizations. IRS bureaucracy has demanded agents to lead no-change audits, to make greater demands for documents, and to disfavor settlements.
Opinion
Sep 12, 2014
Advertising and promotional expenses are usually deductible along with other ordinary and necessary expenses in horse and livestock activities operated as a business. Traditional print ads in magazines can be expensive, and must be repeated in order to be effective.
Opinion
Jul 11, 2014
In an important Tax Court case, J. Zane Smith of Earlville, NY, challenged the IRS’s determination that his cow and dairy activities were a hobby. The lengthy opinion also involved other issues, including his dog breeding activity and a cutting horse activity.
Opinion
Apr 11, 2014
Last fall a freak early snowstorm killed thousands of livestock and horses in South Dakota. Ranchers suffered a tremendous monetary loss of prized livestock and horses. More recently in Kentucky, eight horses were killed in a fire, four of which were yearlings slated for the Keeneland September sale.
Opinion
Jan 17, 2014
In recent years the IRS has ruled that a written business plan is important evidence which tends to prove that you are operating in a businesslike manner. The Tax Court has said that in hobby loss cases you should have “some type of plan” for the venture.
Opinion
Nov 8, 2013
They just broke 2 pounds a day of average daily gain on grass and are heading to the feedlot at 940 pounds. The center had 102 yearling heifers last spring. After selecting 25 replacement heifers, 77 were spayed and sent to grass. Of the 25 replacement heifers, 19 were diagnosed as pregnant.
News
Sep 6, 2013
The IRS Manual has a section in the Audit Technique Guide entitled “IRC Section 183: Farm Hobby Losses With Cattle Operations and Horse Activities.” The guide is intended for to alert IRS auditors to situations pertaining to the horse and cattle industries.
Opinion
May 10, 2013
For many people in the horse or livestock business, the operations have a history of losses, but the expectation is that future operations will be profitable. The IRS will want to see evidence that the taxpayer has taken steps to correct or abandon unprofitable strategies, and to demonstrates steps taken to improve operations.
Opinion
Mar 8, 2013
Some cases involve a combination of activities, such as Smith v. Commissioner, T.C. Memo 2007-368. This involved a cow and dairy farm, a cutting horse operation, and dog breeding. The court held that the cow and dairy farm was engaged in forprofit activities under the IRS hobby loss rules, but not the other activities.
Opinion
Jan 11, 2013
Ever since the inception of income tax, all areas of farming have enjoyed generous tax benefits. Livestock owners are permitted to take depreciation deductions on their farm to offset gross income, as well as to deduct reasonable costs of operating a livestock breeding or activity from other income.
Opinion
Nov 9, 2012
Ever since the inception of income tax, all areas of farming have enjoyed generous tax benefits. Livestock owners are permitted to take depreciation deductions on their farm to offset gross income, as well as to deduct reasonable costs of operating a livestock breeding or activity from other income.
Opinion
Sep 7, 2012
Section 183 of the IRS Code pertains to activities “not engaged in for profit.” This provision is used to disallow deductions for all farming-ranching activities as well as other ventures ranging from multi-level marketing to air charters. How this provision is applied and interpreted is something that the IRS commissioner can and does influence.
Opinion
Jul 20, 2012
Most individuals who fail to file tax returns, or underreport income or take inflated tax deductions may end up being assessed a “fraud” penalty, which enhances the tax liability but does not proceed into the criminal arena.
News
May 11, 2012
The case was Garbini v. Commissioner IRS. Mr. Garbini, of Myrtle Creek, Oregon, listed his occupation as a rancher, and his wife indicated she was a housewife. Both taxpayers were retired during the two taxable years in issue, and for Mr. Garbini this was a full time venture.
Opinion
Mar 23, 2012
Sometimes a farm, livestock or horse activity may be closely connected to one’s principal occupation, with certain tax advantages. If two activities are treated as one, deductions and income from each activity can be aggregated in deciding whether the taxpayer has the requisite profit motive under the IRS hobby loss rule.
News
Dec 16, 2011
Wheat is an amazing crop…which is why we grow it in Oklahoma. Given the slightest opportunity, wheat responds very well under adverse conditions. In late October, the prospects for wheat pasture seemed all but lost with most wheat planted late and dry. It was noted, however, that with timely rains, a decent wheat crop could still develop.
News
Dec 9, 2011
Mr. and Mrs. Harold Kahla of Tomball, TX, were denied farm deductions of $2,658,774 for their cattle and deer ranches, even though Mr. Kahla was knowledgeable about livestock farming and was highly successful in other businesses. They owned 300 head of cattle.
Opinion
Aug 26, 2011
Under the IRS hobby loss rule, if you have losses in connection with any farming activity, whether livestock, horses, or crops, the IRS may suspect that the activity is engaged in as a hobby rather than a business, particularly if there is a history of losses.
Opinion
Nov 5, 2010
After about 30 years handling tax audits, appeals and U.S. Tax Court cases, it seems to me that the IRS is taking a more aggressive approach against people in various industriesincluding livestock and horse activities. If you are audited by the IRS and you have a history of losses with little or no profits, the following advice pertains to you.
Opinion
Sep 10, 2010
Most of the problems with hobby loss audits involve people who have a history of losses with their ranch, farm or horse venture. The IRS tends to say that the activity is not conducted as a business, so that the tax losses are disallowed. This can be a substantial tax payment for quite a few taxpayers.
Opinion
Aug 6, 2010
In hobby loss audits, the IRS sometimes views various types of ranching activities as a means of generating tax losses, rather than a profitoriented venture. That was the issue in the Tax Court case, Ralph Wesinger, Jr., v. Commissioner of Internal Revenue.
Opinion
Mar 26, 2010
The accuracy and businesslike nature of records is something that the IRS has been scrutinizing more and more in recent years. The IRS expects all taxpayers to maintain canceled checks, invoices, credit card statements and similar items needed to substantiate amounts claimed as business deductions and to help prepare ones tax returns.
Opinion
Feb 5, 2010
The American wind power industry grew substantially in 2009 and at this point, almost 2 percent of the countrys electricity is produced from wind turbines. Many of these turbines are on farm and ranch properties all over the country. I have received many inquiries from people who have been approached by wind turbine developers.
Opinion
Dec 24, 2009
The Internal Revenue Service (IRS) has been cracking down on individuals and small businesses including farmers, ranchers and horse ownerswith increased tax audits and aggressive tactics to collect taxes. The tactics include an increased volume of audits, and more bank levies and liens on real property.
Opinion
Aug 21, 2009
Most of tax law is in grey areas. For instance, reasonable people, including those within the IRS bureaucracy, will disagree on what constitutes an ordinary and necessary business expensea big area of tax deductions. Another area concerns whether litigation proceeds to compensate for damages to farm or ranch property constitute taxable income.
Opinion
Jul 17, 2009
A tax case, Mullins v. U n i t e d States, decided in the U.S. District Court in Knoxville, TN, considered an individual who owned and operated a cattle-raising operation who claimed he was entitled to deduct losses over a period of years.
Opinion
Jun 12, 2009
In a lengthy decision, the Tax Court recently underscored the difficulties taxpayers have in convincing the IRS that family-run farms are engaged in for profit. The case, Smith v. Commissioner, T.C. Memo 2007-368, ruled on two families limited partnerships, involving a cow and dairy farm, a cutting horse operation, and dog breeding.
Opinion
Jun 5, 2009
Enforcement action by the Internal Revenue Service (IRS) has actually increased in recent months in the farming, horse and livestock fields, partly due to the need for the government to raise revenue, and partly due to an increase in taxpayers failing to file tax returns or failure to pay taxes owed.
Mar 6, 2009
The farming, livestock and horse industries are facing challenges in hard economic times. These industries serve the economic lifeblood of millions of Americans, not only owners, but related industries and services as well. Casualties and setbacks from economic forces are recurring problems making it difficult to make a profit on a consistent basis.
Feb 20, 2009
The IRS is focusing more on audits in the farming, livestock and horse industries in which taxpayers are claiming six figures or more in tax deductions. This often pertains to taxpayers who are employed full time in a profession and operate the farm or other activity on a parttime basis, often relying on managers and contract employees.
Opinion
Jan 2, 2009
The Internal Revenue Service (IRS) raised a record of $48.7 billion in revenue in fiscal year 2006revenue generated from audits of individuals, small businesses and corporations. There are about 115,000 IRS employees. This translates into a significant net profit to the government.
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